CLOUD AND MORE CLOUDCompanies are harnessing the public cloud as a critical enabler for competitive business

Faster time to market, lower costs and closer connections with partners and customers – the cloud brings these benefits and more to businesses of all sizes. But all clouds are not equal, and organizations that have tried both on-premise and private cloud models are moving to gain advantages that only the public cloud can deliver.

In more than 25 major cities, parking your car is becoming easier. How? Thanks to a service provided by US-based firm SpotAngels, which helps drivers find parking spaces, remember where they parked and avoid fines with text alerts. The service combines data from Internet of Things (IoT) sources such as connected vehicles and plug-in devices, and updates from app users. Cloud computing makes it possible.

“The cloud is essential to what we do,” said SpotAngels co-founder Aboud Jardaneh. “But the real game-changer is how it has been embraced by more traditional players to host data from a growing range of connected devices.

“For example, cities are putting data from connected devices on the cloud, such as real-time information about traffic. All the vehicles produced by some brands, such as BMW, are connected, providing data that can be exported by third parties. And drivers of cars that aren’t connected are using after-market plug-in devices to connect their vehicles to the cloud. These increasing sources of data have made a big difference for companies like ours, which build services on top.”

27%

Total public cloud software spending year-over-year growth according to IDC.

This cloud-enabled collaboration among industries, governments, IoT-enabled devices and individuals is prompting a rapidly growing number of businesses to recognize the essential role of cloud in enabling smarter services and frictionless customer experiences. As a result, companies worldwide are moving to capture cloud’s benefits, ranging from anytime, anywhere access and secure, up-to-date technologies to simpler IT management and lower costs.

HEADING TO THE CLOUD

Companies that have made the move to cloud are achieving measurable improvements in time to market, cost, quality and business agility, according to McKinsey and Company, a global management consulting organization based in the United States. Speaking on a recent podcast, “Learning from Leaders in Cloud-Infrastructure Adoption,” McKinsey partner Irina Starikova talked about the value organizations are gaining by embracing the cloud. “The number-one benefit that many leaders saw from adopting cloud was in time to market.

What that means is that they were able to deploy new applications using cloud services a lot faster than they were able before. Sometimes we were talking about the difference between weeks cut down to a few hours and sometimes less than one hour,” Starikova said. “The importance of that time to market is that the business of those organizations was able to deploy changes to their products a lot faster than they were ever able before or they could change some of their internal processes that they were transforming a lot faster.”

IDC, a US-based global technology analyst firm, agrees that the inherent benefits of cloud are driving adoption. “Year over year, total public cloud software spending is growing around 27%. While a lot of that growth is due to market momentum and more providers pushing cloud solutions over traditional ones, cloud users list increased business agility, improved security and improved staff productivity as the top benefits driving up their interest in public cloud,” said Eric Newmark, program vice president for SaaS (software as a service), enterprise apps and industry cloud at IDC.

“WITHOUT THE CLOUD AS THE BACKBONE, GROUNDBREAKING IOT APPLICATIONS SIMPLY WOULDN’T SEE THE LIGHT OF DAY.”

SIKI GIUNTAMANAGING DIRECTOR, CLOUD AND INFRASTRUCTURE, ACCENTURE

The cloud is especially critical to IoT applications like SpotAngels’ parking service, which generate huge volumes of data that must be collected, analyzed and acted on in real time.

“Without the cloud as the backbone, groundbreaking IoT applications simply wouldn’t see the light of day,” Siki Giunta, managing director, cloud and infrastructure at Accenture, wrote in a recent blog. “The success of IoT hinges on the ability to collect, process and analyze massive amounts of data – in real time. This, in turn, requires enormous on-demand computing and analytics horsepower, as well as a robust and elastic back-end infrastructure.”

The public cloud has emerged as the leading architecture for delivering such benefits. McKinsey found that while many organizations initially built private cloud platforms, they included capabilities to ease their eventual migration to public cloud.

In its 2016 “Leaders and Laggards in Enterprise Cloud Infrastructure Adoption” survey, a majority of enterprise leaders agreed that public cloud can enable business scenarios that on-premise and infrastructures cannot. More than half of those surveyed said they plan to shift at least some applications to the public cloud within three years. “Their ultimate goal is to develop cloud platforms that can meet all the diverse requirements of critical enterprise systems,” the report said.

A BUSINESS ECOSYSTEM REVOLUTION

As businesses move to take advantage of cloud, they also are creating a new competitive arena that McKinsey describes as “digital ecosystems.” In its July 2017 report, “Competing in a World of Sectors Without Borders,” McKinsey describes how these online ecosystems are replacing traditional supply chains and reshaping ideas about value delivery.

Digital connectivity is enabling the shift.

“The cloud lowers the barrier of entry for stakeholders into the network because they don’t need to buy equipment, applications and connections,” said Miguel Alava, director at Amazon Web Services (AWS). “It gives every stakeholder – partners, customers and providers – fast access to their specific needs; it enables fast identification of the needs of the value chain; and it puts businesses closer to the customer. A sense of community develops because everybody owns that value chain, and organizations can develop new partners to serve a need that has been created as the value chain evolves.”

“The cloud enables global collaboration, and as a result we’re seeing closed research and development giving way to open innovation and, beyond that, to ad hoc accelerated innovation through cloud-enabled innovation networks, idea markets, hackathons, contests and challenges,” said Joe Weinman, author of Digital Disciplines. “In some cases, supplier management is evolving to a dynamic constellation of suppliers, where different companies can bid in real time to meet enterprise needs.”

NEW MARKETS, NEW MODELS

By enabling new ways of thinking about how people work together, the cloud has triggered an avalanche of customer-focused innovation.

“When a project engineer authors and saves a document, the changes are immediately uploaded to the cloud in the context of the master model, so we have no risks of isolated models, accidental overwrites or complex check-in, check-out procedures,” said Ryan Yee, automation lead and project modeling designer at CadMakers.

“When we’re on site visits, we can access the data we need without having to download all the files locally, which enables us to communicate any issues to customers and resolve them quickly. This has already helped us to reduce lead time on project delivery. Thanks to the low cost and simplicity of setup, we’ve also given some of our clients access to specific files in the cloud so they can view the models and collaborate with us as their project progresses.”

In Norway, power provider Agder Energi uses Microsoft Azure intelligent cloud, Power BI and Azure IoT Hub in a pilot project to create a “virtuous feedback loop” that will help it better predict and meet electrical demand using distributed resources. The intelligent, cloud-based solution will enable the company to predict demand and identify which power resources are available to cover peaks. The system also will make it easier to integrate renewable energy into the grid mix, so the company won’t need to build a new substation to meet demand.

“We want to use new technology to make the power grid more efficient, more predictable and more flexible,” said Tom Nysted, CEO of Agder Energi. “We will go from being energy generators to energy partners, with a more active role for our customers.”

By incorporating the advanced capabilities companies need, AWS’ Alava said, cloud empowers organizations to focus on strategies that add value for customers and the business – not on information technology considerations.

“Look at Philips in the Netherlands,” Alava said. “The cloud enabled Philips to focus on the services it wanted to provide, without having to worry about how much equipment, storage or compute capacity it would need. It developed the Philips HealthSuite digital platform, which stores and analyzes huge volumes of patient data, on the AWS cloud, allowing the company to provide new, proactive services for patients which were not imaginable before.”

CONFIDENCE IN THE CLOUD

Like Philips, many companies have launched innovations that would have been impossible without the security and consistency delivered by public cloud providers.

“Since we moved to the cloud to improve the scalability of our data storage capabilities, we’ve automatically received software updates so we’re always using the latest version,” said Edward Stilson, product engineer at Joby Aviation, a California-based aerospace company. “Having our data on the cloud means that we get these updates wherever we are in the world, so our team members can simply open their laptops and work.”

65%

IDC predicts that by 2018 65% of companies’ IT assets are expected to be located offsite in co-location, hosting and cloud data centers.

Small companies aren’t the only ones growing comfortable with third-party cloud providers. Fortune recently reported that General Electric dropped plans to build its own cloud data centers worldwide, opting instead to host its software and services on AWS and Microsoft Azure public cloud data centers. The report quoted executives from two large US companies that are customers of GE – Exelon and the New York Power Authority – who said they don’t care which cloud supports their services – they only want reliability.

That confidence reflects the massive investments cloud providers have made in building a secure, enterprise-ready public cloud. AWS and Microsoft Azure, for example, have invested heavily in making the public cloud a secure environment for all organizations, including “government cloud” data centers that meet the strict security requirements of highly regulated industries such as nuclear power.

“Security is the business of the entire chain of data trust,” said Laurent Seror, CEO of France-based cloud infrastructure service provider Outscale, a Dassault Systèmes strategic partner. “A company that wants to strengthen its security can call on a cloud that presents all the necessary certifications – certifications that the company itself may not have.”

A BUSINESS ESSENTIAL

As industry after industry has been disrupted by cloud-based business models, more enterprises have come to view cloud as a business essential.

“Many recent and current corporate battles are between digital-savvy, cloud-enabled businesses and legacy competitors,” Weinman said. “New competitors increasingly are using profits that they generate from cloud-based virtual businesses to pursue real-world or ‘digical’ (digital + physical) strategies. For example, Netflix put the corner video store out of business; Amazon.com and Alibaba are giving retailers a run for their money; Uber and Didi are challenging traditional taxi services; and traditional car manufacturers are under attack thanks to Tesla’s skills in software. No industry is immune to these changes.“

The bottom line, industry observers agree, is that every company must think seriously about its cloud strategy – or risk falling behind its competitors.

“Cloud has become the new model for companies of every size, industry or geography,” Alava said. “The question now is not whether companies are going to use cloud. It is how fast they can move to it, which applications they will move first and what they’re going to do when they get there.”